Financial derivatives -- such as futures or options -- are a powerful technique through which hedging, speculation, investment and arbitrage takes place in a modern economy. The major products of the equity derivatives industry worldwide, is Index derivatives. Internationally, trading volume on index derivatives is multi times larger than that of securities derivatives.
Index Derivatives are mainly traded by professional traders, investors and portfolio managers to protect equity portfolio, to arrange cost-effective exposure to an index whilst purchasing the underlying shares, to take a trading view on the direction of the market.
- Price transparency and liquidity
- Lower transaction fees than those incurred when buying or selling the basket of securities making up the index
- Immediate execution and confirmation
- Reduction of counter-party risk
- Standardised contracts available
- Cash settled contracts available
In an environment where the depository has not yet come to dominate all settlement, this is a considerable advantage over any transactions involving securities. India INX Equity Index derivatives gives investors the tools they need to best position themselves in an ever-changing market environment.
Trading on India INX, that connects buyers and sellers achieves transparent price discovery. All transactions are cleared through India ICC, which adheres to strict management standards. The risk management standards adopted by India ICC are in line with international requirements for central counterparties. The main function of India ICC is to reduce counterparty credit risk.
On India INX, the most popular Equity Index Derivatives are S&P BSE SENSEX & S&P BSE SENSEX 50.